Of Gifts – A Legal Study

By Y.SRINIVASA RAO, Research Scholar in Law of Torts, Principal Senior Civil Judge, Tirupati, Andhra Pradesh.

TABLE OF CONTENTS

  1. Introduction
  2. ‘Gift’ denied
  3. Transfer how effected – Effect of unregistered Gift deed.
  4. Gift of existing and future property
  5. Gift to several, of whom one does not accept
  6. When gift may be suspended or revoked
  7. Onerous gifts
  8. Universal donee
  9. Conclusion

Introduction:-

Sections 122 to 129 in the Chapter- VII of the Transfer of Property Act, 1882 deal with ‘Gifts’. Gift is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee and accepted by or on behalf of the donee, as seen from Section 122, Transfer of Property Act, 1882. A gift, though a transfer, is a gratuity and an act of generosity and does not contain any element of consideration in any shape or form. Complete absence of monetary consideration is the main hallmark which distinguishes a gift from a grant or for that matter other transactions which may be for valuable or adequate consideration. Where there is any equivalent or benefit measured in terms of money in respect of a gift the transaction ceases to be a gift and assumes a different colour, Sonia Bhatia v. State of U.P., (1981) 2 SCC 585. The old text-writers made a gift (donatio) a distinct species of deed and describe it as a conveyance applicable to the creation of an estate-tail; while a feoffment they strictly confine to the creation of a fee simple estate. The operative verb in ‘give’, which no longer implies any covenant in Law (Real Property Act, 1845, 8 & 9 Vict. c. 106, Section 4) and the deed requires livery of seisin. A gift is not presumed and a Court of Equity will not assist a donee, but rather relieve a donor by setting aside the gift on the ground of undue influence (see that title) or a fiduciary relationship of the donee to the donor. Huguenin v. Baseley, (1807) 14 Ves 273: 33 ER 226; Morley v. Loughan, (1893) 1 Ch 736, 757; Lyon v. Home, (1868) LR 6 Eq 655.  Under Mohammedan law, gift is a donation conferring right of property without exchange. The gift is in the nature of contract where there must be a tender of property, acceptance of the property by the donee and delivery of possession of the property. It is only when these three ingredients are satisfied a gift is completed, Gulamhussain Kutubuddin Maner v. Abdulrashid Abdulrajak Maner, (2000) 8 SCC 507.

‘Gift’ defined:-

‘GIft’ should be without “consideration” of the nature defined in Section 2 (d) of the Contract Act. See. Smt. Shakuntala And Ors. vs State Of Haryana, AIR 1979 SC 843. Section 5 of of the Transfer of Property Act defines “transfer of property” to mean an act by which a living person conveys property, in present or in future, inter alia, to one or more other living persons. Such transfer of property may be made by one of the several modes known to law e.g.

by sale,

exchange or

gift etc.

Section 122 of the Transfer of Property Act defines “gift” as follows,-

122. “Gift” is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another called the donee, and accepted by or on behalf of the donee.

Essential requirements of a gift :-

‘Gift’ should be made by the donor “without consideration”. The word “consideration” has not been defined in the Transfer of Property Act, Transfer of Property Act, but there is no doubt that it has been used in that Act in the same sense as in the Indian Contract Act and excludes natural love and affection. If it were to be otherwise, a transfer would really amount to a sale within the meaning of Section 54 of the Transfer of Property Act, or to an exchange within the meaning of Section 118 for each party will have the rights and be subject to the liabilities of a seller as to what he gives and have the rights and be subject to the liabilities of a buyer as to that which he takes.

 In order to constitute a valid gift, acceptance must, according to the provision (section 122 of the Act), be made during the life time of the donor and while he is still capable of giving. It stipulates that a gift is void if the donee dies before acceptance.

Gift or Hiba:- Muslim Law does not distinguish real and personal property nor does recognize the splitting up of ownership of land into estates. But, it draws distinction between the corpus of the property  (ayn) and the usufruct in the property (manafi).

Under Muslim Law, what is important to see is that whether it is a gift of corpus or a gift of limited interests (usufructuary in nature ).. In fact, Ownership for a limited period is not contemplated at all under Musilm Law. If it is a gift of the corpus, then any condition which derogates from absolute dominion over the subject of the gift will be rejected as repugnant , of course, ( in case of, upon its construction, a gift is said to be one of limited interest the gift can take effect out of the usufruct, leaving the ownership of the corpus unaffected to the extent to which its enjoyment is postponed for the duration of the limited interest). See the principles of law laid down in  Amjad Khan case and Nawazish Ali Khan. But, as is evident from Inayet Begum v. Maryum Bibi, Ghulam Iqbal Khan v. Abdul Jalil, Anjuman Ara v. Nawab Asif Kader etc., the Sunni and Shia Law on the validity of limtied interest are now being assimilated. The dicta laid down in Sk. Mastan Bi v. Sk. Bikari Shahab, AIR 1958 AP 751, indcates that limitation on the enjoyment of property can be permissable, despite it is not allowed on ownership.  The Apex Court, in 2011 (5) Mh. LJ. (S.C.) 24 Hafeeza Bibi v. Sk. Farid and 2015 (2) Mh. LJ. (S.C.) 96 Rasheeda Khatoon v. Ashiq Ali, while dealing with the Mohammedan Law revolving to gift or hiba and its requirement of payment of stamp duty as contemplated in the Registration Act, 1908, sections 17 and 49, elaborated the essential ingredients of a valid oral gift as under—

(i) declaration of gift by donor;

(ii) acceptance of gift by donee; and

(iii) delivery of possession of the property.

All three essential requirement makes such gift complete and irrevocable. It is also held that the gift deed or instrument of gift in every matter is not required registration. Following the dicta of the Hon’ble Apex Court, the Bombay High Court, in Mohammed Yusuf vs. State of Maharashtra and others, (2015) 3 Mah LJ 470, held that the provisions of sections 122 to 129 of Transfer of Property Act, 1882 are not applicable to such Mohammedan gift (section 129 of the Act). There is no provision in the Act for levying the stamp duty on oral gift made by any Mohammedan of sound mind, in favour of the donee. Therefore, the stamp duty levied by respondent No. 3 for the transfer of the orally gifted property in favour of petitioner is illegal and unsustainable. To say in short, under the Muslim law, use and enjoyment of property for one’s life time can be permitted by virtue of family settlement, and it can be doen by will to a limited extent and it can also be made by family Wakf and contract. However, such modes of transfer are not the same as gift or hiba.

Saving of donatio mortis causa and Mohammedan Law:- Section 129 of the Transfer of Property Act deals with Saving of donations mortis cause and Mohammedan Law. It is seminal to see that ‘donatio mortis causa’ is explained in Commissioner Of Gift Tax vs Abdul Karim Mohd. AIR 1991 SC 1847. Section 191 of the Indian Succession Act deals with the requirements of gifts made in contemplation of death. There is nothing new in the requirements provided under Section 191 of the Succession Act. They are similar to the constituent elements of a valid donatio mortis causa. The essential conditions of a donatio mortis causa may be summarised thus: “For an effectual donatio mortis causa three things must combine: firs, the gift or donation must have been made in contemplation, though not necessarily in expectation of death; secondly, there must have been delivery to the donee of the subject matter of the gift; and thirdly. the gift must be made under such circumstances as shew that the thing is to revert to the donor in case he should recover. This last requirement is sometimes put some-what differently, and it is said that the gift must be made under circumstances shewing that it is to take effect only if the death of donor follows; it is not necessary to say which way of putting it is the better.” (See Cain v. Moon, [1896] 2 Q.B. 283 at 286).

The vital distinction between a gift inter vivos and a gift causa mortis is that the former is irrevocable, while the latter may be revoked at any time before the donor’s death, and may be defeated by the recovery or survival of the donor. More fully, a gift causa mortis is liable to revocation by the donor and does not pass an irrevocable title until the death of the donor, while a gift inter vivos vests an irrevocable title on delivery; in the case of a gift inter vivos the title is not only transferred and vested in the donee at once, but the gift is immediately completed and is absolute and irrevocable, while in the case of a gift causa mortis the transfer is subject to be defeated by the happening of any one of the conditions implied by the law.

Transfer how effected:

How the gift is to be effective has been stated in Section 123 which envisages that “for the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.” Section 123 of the Transfer of Property Act, 1882 makes it clear that ”for the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. Such delivery may be made in the same way as goods sold may be delivered”.

” The gift of immovable property should be made only for transferring the right, title and interest by the donor to the donee by a registered instrument signed by or on behalf of the donor and must be attested by at least two witnesses. The pre-existing right, right, title and interest of donor thereby stand divested in the donee by operation of Section 17  of the Registration Act only when the gift deed in duly registered and thereafter the donor would lose title to the property. It must also be proved that the donee had property. It must also be proved that the donee had accepted the property gifted over under the instrument.” See. Smt. Gomtibai (Dead) Through Lrs. … vs Mattulal [Dead) Through Lrs , (1996) 11 SCC 681.

An apparent conflict between two earlier decisions rendered by the Apex Court one in Naramandaben Maganlal Thakker v. ranjivandas Mangal Thakker and Ors, (1997) 2 SCC 255 and the other in K.Balakrishnan vs. K.Kamalam and Ors, (2004) 1 SCC 581 has led to the reference to a larger bench, in Renikuntla Rajamma (D) By Lr vs K.Sarwanamma, (2014) 9 SCC 445, for an authoritative pronouncement as to the true and correct interpretation of Sections 122 and 123  of The Transfer of Property Act, 1882.

In Renikuntla Rajamma (D) By Lr vs K.Sarwanamma, (2014) 9 SCC 445, it was observed:

Section 123 of T.P. Act regulates mode of making a gift and, inter alia, provides that a gift of immovable property must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. In the case of movable property, transfer either by a registered instrument signed as aforesaid or by delivery is valid under Section 123.

On careful reading of Section 123  of T.P. Act, it leaves no manner of doubt that a gift of immovable property can be made by a registered instrument singed by or on behalf of the donor and attested by at least two witnesses. When read with Section 122  of the Act, a gift made by a registered instrument duly signed by or on behalf of the donor and attested by at least two witnesses is valid, if the same is accepted by or on behalf of the donee. 

That such acceptance must be given during the life time of the donor and while he is still capable of giving is evident from a plain reading of Section 122 of the Act. 

A conjoint reading of Section 122 and 123  of the Act makes it abundantly clear that “transfer of possession” of the property covered by the registered instrument of the gift duly signed by the donor and attested as required is not a sine qua non for the making of a valid gift under the provisions of Transfer of Property Act, 1882. 

As seen from the rulings in Renikuntla Rajamma (D) By Lr vs K.Sarwanamma, (2014) 9 SCC 445 as to the true and correct interpretation of Section 123 of the Transfer of Property Act have for a fairly long period held that Section 123 of the Act supersedes the rule of Hindu law if there was any making delivery of possession an essential condition for the completion of a valid gift. In 2019 , in S.Sarojini Amma vs Velayudhan Pillai Sreekumar, (2019) 4 SCC (Civ) 696, the Apex Court agreed the ratio laid in Renikuntal Rajamma’s case (supra), and held that there is no provision in law that ownership in property cannot be gifted without transfer of possession of such property. However, the conditions precedent of a gift as defined in Sectiodn 122 of the Transfer of Property Act must be satisfied. A gift is transfer of property without consideration. Moreover, a conditional gift only becomes complete on compliance of the conditions in the deed. In Nakka Parthasarathy vs Nakka Krsihnaveni And Another when once the gift deed is voluntarily made without there being any coercion or undue influence, the acceptance of the gift by the donee would be complete even though the deed of gift is not delivered to the donee and the gift property continues to be in the donors possession. See also. Smt. Syamala Raja Kumari’s case (infra).

Effect of unregistered Gift deed:-

As was held in Varatha Pillai v. Jeevarathnammal, 1918 SCC Online PC 50, an unregistered deed of gift requiring registration under Section 17 of the Registration Act is admissible in evidence not to prove the gift, but to explain by reference to it the character of the possession of the person who held the land and who claimed it, not by virtue of deed of gift but by setting up the plea of adverse possession.

Gift of existing and future property:-

Section 124 of the T.P. Act says that a gift comprising both existing and future property is void as to the latter. It was held by the Hon’ble Patna High Court, in 2007, in Rameshwar Singh And Ors. vs Harendra Singh And Ors, the very wordings of Secton 124 specify that a gift is a transfer of existing property and there can be no alienation of a thing not in existence. The section further clarifies that where a gift was made of all the present and future properties the transfer is good as to the property existing on the date of execution of gift but bad as to after acquired property. 

Gift to several, of whom one does not accept:-

Under section 125 of the T.P. Act, a gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted.

When gift may be suspended or revoked:-

Once a valid gift has given by the donor and was accepted by donees, the same cannot be revoked for any reason. As per the provisions of Section 126 of the Transfer of Property Act, if the gift is a conditional one, and the donee has not fulfilled the condition, then the donor may get some right to revoke the gift. See. Smt. Syamala Raja Kumari And … vs Alla Seetharavamma And Another ( S.A. No. 1054/2016, Judgment dated 02-01-2017).

Section 126 of T.P. Act reads as follows:

126. When gift may be suspended or revoked.—The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be. A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded. Save as aforesaid, a gift cannot be revoked. Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice.

Illustrations

(a) A gives a field to B, reserving to himself, with B’s assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A’s lifetime. A may take back the field.

(b) A gives a lakh of rupees to B, reserving to himself, with B’s assent, the right to take back at pleasure Rs. 10,000 out of the lakh. The gift holds goods as to Rs. 90,000, but is void as to Rs. 10,000, which continue to belong to A.

The Hon’ble Andhra Pradesh High Court, in, 2012, Pagadala Bharathi And Another vs J.Radha Krishna, it was held that under Section 126  of the Act, if a gift is to be revoked or suspended, there should be a right reserved. It is also held that the donor himself has admitted the execution of the gift deed and consequently, there cannot be said to be any lacunae in proving the gift deed. In Dwarampudi Tulasamma (died) per L.Rs. v. Nallamilli Atchireddy and others , it was observed that a Gift can be revoked or cancelled only if the donee has not acted upon it or has not accepted the benefit under the gift deed.

In Grandhi Padmanabbam vs. Nageilkonda Venkata China Singarayya, judgment dated 23-04-1996, the Hon’ble High Court observed that contemporaneous unregistrate agreemnt incorporating a coondition which was executed on the same day of registered gift deed for the same property must be read along with the gift deed. If donee fails to fulfil the condition, the donor is entitled to sue for revocation of the gift deed.

In Ediga Chandrasekar Gowd’s case, it was held as follows:

”45. Thus, the term “conveyance” has a wider connotation and it would certainly include deeds of “sale”/”gift”/”exchange” by which property is transferred from one person to another.

46. If the rule making authority, which framed Rule 26(i)(k)(i), intended that the said rule should apply only to “sale”/”gift”/”exchange” deeds, it would have mentioned these category of documents specifically. There was no necessity to use the words “conveyance on sale”.

47. The obvious intention of the rule making authority appears to be to cover transactions which are not merely in the nature of deeds of sale. It thus, in my opinion, intended to cover not only “gift”/”exchange” deeds but also “agreements for sale”/executory contracts or “agreements for sale-cum-General Power of Attorney” or “agreements for sale-cum-Irrevocable General Power of Attorney.”

Thus, on a conspectus of the jurisprudence, the judicial opinion consistently is that Rule 26(k)(i) though not specifically referred to other forms of conveyance other than Sale Deed, still the said rule applies to such conveyances like gift deed, Agreement to Sale-cum-General Power of Attorney (GPA) etc. See also. Satya Pal Anand’s case and Pinnama Raju Ranga Raju, vs The State Of Andhra Pradesh.

Onerous Gift:— Where a gift is in the form of a single transfer to the same person of several things of which one is and the others are not burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully. Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous, [Section 127, Transfer of Property Act, 1882.

Universal donee:- Section 128 of T.P. Act says that subject to the provisions of section 127, where a gift consists of the donor’s whole property, the donee is personally liable for all the debts due by 1[and liabilities of] the donor at the time of the gift to the extent of the property comprised therein.

Conculsion:- Chapter VII of the Transfer of Property Act, 1882 deals with gifts generally and, inter alia, provides for the mode of making gifts. ‘GIft’ must be without “consideration” of the nature defined in Section 2 (d) of the Contract Act. If essential conditions of a Gift are attracted, such transfer would really amount to a sale within the meaning of Section 54 of the Transfer of Property Act, or to an exchange within the meaning of Section 118 of the Transfer of Property Act. The distinction between a gift inter vivos and a gift causa mortis is that the former is irrevocable, while the latter may be revoked at any time before the donor’s death, and may be defeated by the recovery or survival of the donor. The thoery of life interest in English Law is different to that of the theory of in Muslim law. A careful reading of Section 123 of T.P. Act which leaves no manner of doubt that a gift of immovable property can be made by a registered instrument singed by or on behalf of the donor and attested by at least two witnesses. Judicial pronouncements as to the true and correct interpretation of Section 123 of the T.P. Act have for a fairly long period held that Section 123 of the Act supersedes the rule of Hindu Law if there was any making delivery of possession an essential condition for the completion of a valid gift. Section 124 to 129 of the T.P. Act which are the remaining provisions that comprise Chapter VII deal with matters like gift of existing and future property, gift made to several persons of whom one does not accept, suspension and revocation of a gift, and onerous gifts including effect of non-acceptance by the donee of any obligation arising thereunder. Under Section 126  of the Act, if a gift is to be revoked or suspended, there should be a right reserved. 

T.P. Act

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